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Sifma Slams State Fiduciary Rule Approach

October 11, 2017

The industry trade group Sifma has taken aim at Nevada’s new fiduciary rule, signed into law in June, arguing any changes to current standards at the state level would violate an act of Congress, The Wall Street Journal writes.

Applying different requirements on brokers state by state would confuse financial professionals and result in potentially contradicting regulations, Lisa Bleier, managing director for public policy and advocacy at Sifma, said in testimony last week before the state’s securities regulator, the paper writes. Moreover, Bleier suggested any changes to Nevada’s fiduciary rule would violate the National Securities Markets Improvement Act of 1996, designed to thwart patchwork rule-making in the financial services industry, according to the Journal.

The testimony comes four months after Nevada Gov. Brian Sandoval signed a bill expanding the state’s fiduciary rule, which requires brokers to put clients’ interest first rather than merely requiring them to make suitable investment recommendations. It encompasses all financial planners, including broker-dealers and investment advisors. The move came just two weeks before the partial implementation of the Department of Labor’s fiduciary rule, which purports to require only retirement account advisors to put clients’ interests ahead of their own.

Nevada is not alone in taking its own course on the fiduciary duty as the fate of the DOL’s rule remains in the balance following a directive from President Donald Trump to review the rule, with the final implementation date pushed back by 18 months and key provisions already taken out.

Connecticut has also signed a bill to expand its fiduciary requirements on brokers, while lawmakers in New York, New Jersey and Massachusetts have introduced similar measures, the Journal writes. Sifma and several other industry groups have argued for a uniform standard for brokers issued by the SEC, according to the paper. Sifma says that, while the DOL rule is undergoing review and the SEC hasn’t rolled out its own regulation, Nevada should use the suitability standard to regulate brokers, the Journal writes.

By Alex Padalka
  • To read the Wall Street Journal article cited in this story, click here.